RADNOR, Pa.-- Penn Virginia Corporation (NYSE: PVA) today reported financial and operational results for the three months and year ended December 31, 2009 and provided an update of full-year 2010 guidance.
Fourth Quarter 2009 Highlights
Fourth quarter 2009 results, with comparisons to fourth quarter 2008 results, included the following:
-- Record proved reserves of 942 billion cubic feet of natural gas equivalent (Bcfe) as of December 31, 2009, as compared to 916 Bcfe as of December 31, 2008; -- Quarterly oil and gas production of 11.3 billion cubic feet of natural gas equivalent (Bcfe), or 123.1 million cubic feet of natural gas equivalent (MMcfe) per day, as compared to 13.2 Bcfe, or 143.8 MMcfe per day; -- Operating cash flow, a non-GAAP (generally accepted accounting principles) measure, of $74.4 million as compared to $95.7 million; -- Operating income of $20.6 million, which included $11.1 million of non-cash impairment charges, as compared to an operating loss of $31.9 million, which included $51.8 million of non-cash impairment charges; -- Adjusted net loss attributable to PVA, a non-GAAP measure which excludes the effects of the non-cash change in derivatives fair value, impairments and gains or losses that affect comparability to the prior year period, of $0.4 million, or $0.01 per diluted share, as compared to adjusted net income of $10.7 million, or $0.26 per diluted share; -- Net loss attributable to PVA of $5.4 million, or $0.12 per diluted share, as compared to net loss attributable to PVA of $0.5 million, or $0.01 per diluted share; and -- Financial liquidity consisting of undrawn borrowing capacity and cash balances at December 31, 2009, pro forma to include the net proceeds from our January 2010 Gulf Coast divestiture,of approximately $410 million, as compared to approximately $150 million on December 31, 2008.
Reconciliations of non-GAAP financial measures to GAAP-based measures appear in the financial tables later in this release.
Management Comment
A. James Dearlove, President and Chief Executive Officer, said, "Compared to the prior year quarter, we experienced significant declines in commodity prices and a 14 percent decrease in oil and gas production resulting from our decision to suspend drilling during a large part of 2009. However, the fourth quarter of 2009 came in as expected and we believe we are well-positioned for growth in 2010 and beyond. As detailed in our separate operational update, fourth quarter production was at the high end of our expectations and we expect growth of six to 13 percent in 2010, pro forma the divestiture of our Gulf Coast assets. Due to the improved pricing environment and outlook for natural gas we have recommenced drilling and currently have six operated rigs running in our core plays.
"For 2010, we have hedged approximately 55 percent of our estimated natural gas production, at average floor and ceiling prices of $6.09 and $8.19 per MMBtu, respectively. During 2009 and through January 2010, we raised over $510 million from the issuances of debt and equity securities and the sale of non-core assets, including a portion of our position in PVG. As a result, we have substantially improved our financial liquidity, with $300 million of unused availability on our revolving credit facility and over $100 million of cash on hand. We expect our strong hedge and liquidity positions to facilitate future growth in our focused, resource play-driven operations.
"In addition to our core oil and gas exploration and production business segment, we own 51 percent of Penn Virginia GP Holdings, L.P. (NYSE: PVG). PVG owns the general partner of Penn Virginia Resource Partners, L.P. (NYSE: PVR) and is PVR's largest limited partner unitholder. As the owner of the general partner and largest unitholder of PVG, we report our financial results on a consolidated basis with the financial results of PVG. At current distribution rates, our ownership of PVG and PVR provides us approximately $30 million of annualized pre-tax cash flow."
Full-Year 2009 Consolidated Results
For the year ended December 31, 2009, operating cash flow was $280.5 million, as compared to $413.8 million in 2008. We incurred an operating loss of $98.2, which included charges of $127.7 million for impairments on assets held for sale, drilling rig standby charges and other impairments, as compared to operating income in 2008 of $256.8 million, which included charges of $51.8 million for impairments and $31.4 million of gains on the sale of assets. The adjusted net loss attributable to PVA, which excludes the effects of non-cash impairments, change in derivatives fair value, drilling rig standby charges and gains on the sale of assets, was $14.1 million, or $0.32 per diluted share, as compared to adjusted net income attributable to PVA of $85.5 million, or $2.03 per diluted share, in 2008. The net loss attributable to PVA was $114.6 million, or $2.62 per diluted shared, as compared to net income attributable to PVA of $121.1 million, or $2.87 per diluted share, in 2008 due primarily to the decrease in operating income. Oil and gas production increased nine percent to a record 51.0 Bcfe and proved reserves increased three percent to a record 942 Bcfe. At PVR, lessee coal production and natural gas midstream system throughput volumes were also fiscal year records for those segments.
Oil and Gas Segment Review
Fourth quarter oil and gas production decreased 14 percent to 11.3 Bcfe, or 123.1 MMcfe per day, from 13.2 Bcfe, or 143.8 MMcfe per day, in the fourth quarter of 2008, and nine percent from 12.4 Bcfe, or 134.9 MMcfe per day, in the third quarter of 2009. See our separate operational update news release dated February 4, 2010 for a more detailed discussion of operations for the oil and gas segment.
For the fourth quarter of 2009, the oil and gas segment operating loss of $8.0 million was a $16.5 million improvement over the operating loss of $24.5 million in the prior year quarter. Adjusting for a non-cash impairment charges (primarily on assets held for sale and subsequently divested) of $9.6 million in the fourth quarter of 2009 and a non-cash impairment charge of $20.0 million in the fourth quarter of 2008, operating income was $1.6 million, or $6.1 million greater than operating loss of $4.5 million in the prior year quarter. The increase in adjusted operating income was due to a $30.1 million decrease in non-cash exploration and depreciation, depletion and amortization (DD&A) expenses and a $3.0 million decrease in cash operating expenses, due to reduced drilling and production in the fourth quarter of 2009, partially offset by a $26.9 million decrease in total revenues. The 31 percent decrease in total revenues was primarily due to a $2.03 per thousand cubic feet (Mcf), or 32 percent, decrease in the natural gas price and the 14 percent production decrease, partially offset by a 41 percent increase in the oil price and a 36 percent increase in the price of natural gas liquids (NGLs).
In the fourth quarter of 2009, total oil and gas segment expenses, excluding the impairment and rig standby charges, decreased by $32.5 million, or 36 percent, to $57.9 million, or $5.11 per Mcfe produced, from $90.5 million, or $6.84 per Mcfe produced, in the fourth quarter of 2008, as discussed below:
-- Fourth quarter 2009 cash operating expenses were $23.4 million, or $2.06 per Mcfe produced, as compared to $26.4 million, or $1.99 per Mcfe produced, in the fourth quarter of 2008. The increase in unit cash operating expenses was primarily due to higher segment general and administrative (G&A) expense and taxes other than income, partially offset by lower lease operating expense, as discussed below: o Lease operating expense decreased seven percent to $1.14 per Mcfe from $1.22 per Mcfe primarily due to decreased overall service costs due to lower commodity prices; o Taxes other than income increased 17 percent to $0.34 per Mcfe from $0.29 per Mcfe primarily due to the production decrease; and o Segment G&A expense increased 20 percent to $0.59 per Mcfe as compared to $0.49 per Mcfe primarily due to the production decrease and additional costs related to an office relocation.
-- Exploration expense decreased 87 percent to $2.9 million in the fourth quarter of 2009, as compared to $22.7 million in the prior year quarter, due in part to a lack of exploratory drilling in the fourth quarter of 2009 and $13.9 million of charges in the prior year quarter for dry-hole costs and a write-off of leasehold acquisition costs. -- DD&A expense decreased by $10.2 million, or 25 percent, to $31.2 million, or $2.74 per Mcfe, in the fourth quarter of 2009 from $41.4 million, or $3.13 per Mcfe, in the prior year quarter. The overall decrease in DD&A expense was primarily due to the production decrease and a lower depletion rate per unit of production. The lower depletion rate was primarily due to an impairment of Gulf Coast assets held for sale (subsequently divested) during the third quarter of 2009 and increasing contributions to production from the high-return Granite Wash play.
During the fourth quarter of 2009, we incurred approximately $9.6 million of impairments. These charges were primarily related to Gulf Coast assets held for sale which were subsequently sold in January 2010.
Coal & Natural Resource Management and Natural Gas Midstream Segment Review (PVR and PVG)
As the owner of the general partner and largest unitholder of PVG, we report our financial results on a consolidated basis with the financial results of PVG. A conversion of the GAAP-compliant financial statements ("As reported") to the equity method of accounting ("As adjusted") is included in the "Conversion to Non-GAAP Equity Method" table in this release. Using the equity method, PVG's results are reduced to a few line items and the results from oil and gas operations are therefore highlighted. We believe that the financial statements presented using the equity method are less complex and more comparable to those of other oil and gas exploration and production companies. Financial and operational results and full-year 2010 guidance for each of PVR's segments are provided in the financial tables later in this release. In addition, operational updates for these segments are discussed in more detail in PVR's news release dated February 10, 2010. Please visit PVR's website, www.pvresource.com, under "For Investors" for a copy of the release.
As previously announced, on February 19, 2010, PVG will pay to unitholders of record as of February 2, 2010 a quarterly cash distribution of $0.38 per unit, or an annualized rate of $1.52 per unit. The distribution remains unchanged from the distribution paid in the previous quarter. As a result of PVG's distribution, we will receive a cash distribution of $7.6 million in the first quarter of 2010, or $30.5 million on an annualized basis.
Capital Resources, Credit Facility and Impact of Derivatives
As of December 31, 2009, we had outstanding borrowings of $530.0 million ($498.4 million carrying value), consisting of $300 million ($291.7 million carrying value) of senior unsecured notes due 2016 and $230.0 million ($206.7 million carrying value) of convertible senior subordinated notes due 2012 and no borrowings against our revolving credit facility. The $32.0 million decrease in outstanding borrowings as compared to the $562.0 million at December 31, 2008 was primarily due to the repayment of revolver debt following a $64.9 million offering of PVA common shares in May 2009 and a $118.1 million offering of PVG common units in September 2009, as well as free cash flow during the second half of 2009, net of spending to fund our oil and gas capital expenditures. Currently, we have $300 million of unused availability on our revolving credit facility and over $100 million of cash on hand.
As of December 31, 2009, PVR had outstanding borrowings of $620.1 million under its $800 million revolving credit facility with remaining revolver borrowing capacity of $178.3 million. The $52.0 million increase in outstanding PVR borrowings as compared to $568.1 million outstanding as of December 31, 2008 was primarily due to PVR capital expenditures during 2009. PVR's debt is non-recourse to PVA.
Consolidated interest expense increased from $14.0 million in the fourth quarter of 2008 to $18.6 million in the fourth quarter of 2009. The increase was due to a higher interest rate on the senior unsecured notes PVA issued in June 2009 and higher average level of outstanding borrowings during the fourth quarter of 2009 as compared to the prior year quarter.
Due to decreases in natural gas and crude oil prices experienced during the fourth quarter, the mark-to-market valuation of our and PVR's open hedging positions resulted in derivatives income of $3.4 million in the fourth quarter as compared to derivatives income of $51.0 million in the prior year quarter. Included in derivatives income for the fourth quarter of 2009 was $11.1 million of income related to our oil and gas segment and $7.7 million of expense related to PVR. Fourth quarter 2009 cash settlements of our oil and gas derivatives resulted in net cash receipts of $10.3 million, as compared to $5.8 million of net cash receipts in the same quarter of 2008. PVR's fourth quarter 2009 cash settlements of commodity and interest rate derivatives result in net cash payments of $1.1 million, as compared to $5.2 million of net cash payments in the same quarter of 2008.
Guidance for 2010
See the Guidance Table included in this release for guidance estimates for full-year 2010. These estimates, including capital expenditure plans, which were discussed in our operational update, are meant to provide guidance only and are subject to revision as our and PVR's operating environments change.
Full-Year and Fourth Quarter 2009 Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss fourth quarter 2009 financial and operational results, is scheduled for Thursday, February 11, 2010 at 3:00 p.m. ET. Prepared remarks by A. James Dearlove, President and Chief Executive Officer, will be followed by a question and answer period. Investors and analysts may participate via phone by dialing 1-866-630-9986 five to ten minutes before the scheduled start of the conference call, or via webcast by logging on to our website, www.pennvirginia.com, at least 15 minutes prior to the scheduled start of the call to download and install any necessary audio software. A telephonic replay of the call will be available for two weeks by dialing 1-888-203-1112 (international: 1-719-457-0820) and using the following replay code: 7649645. An on-demand replay of the conference call will be available for two weeks at our website.
Penn Virginia Corporation (NYSE: PVA) is an independent natural gas and oil company focused on the exploration, acquisition, development and production of reserves in onshore regions of the U.S., including East Texas, Mississippi, the Mid-Continent region and the Appalachian Basin. We also own approximately 51 percent of PVG, the owner of the general partner and the largest unit holder of PVR, a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business. For more information, please visit PVA's website at www.pennvirginia.com.
Certain statements contained herein that are not descriptions of historical facts are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the following: the volatility of commodity prices for natural gas, NGLs, crude oil and coal; our ability to access external sources of capital; uncertainties relating to the occurrence and success of capital-raising transactions, including securities offerings and asset sales; reductions in the borrowing base under our Revolver; our ability to develop and replace oil and gas reserves and the price for which such reserves can be acquired; any impairment write-downs of our reserves or assets; reductions in our anticipated capital expenditures; the relationship between natural gas, NGL, crude oil and coal prices; the projected demand for and supply of natural gas, NGLs, crude oil and coal; the availability and costs of required drilling rigs, production equipment and materials; our ability to obtain adequate pipeline transportation capacity for our oil and gas production; competition among producers in the oil and natural gas and coal industries generally and among natural gas midstream companies; the extent to which the amount and quality of actual production of our oil and natural gas or PVR's coal differ from estimated proved oil and gas reserves and recoverable coal reserves; PVR's ability to generate sufficient cash from its businesses to maintain and pay the quarterly distribution to its general partner and its unitholders; the experience and financial condition of PVR's coal lessees and natural gas midstream customers, including the lessees' ability to satisfy their royalty, environmental, reclamation and other obligations to PVR and others; whether the sale of our Gulf Coast assets closes during the fourth quarter and at the anticipated price; operating risks, including unanticipated geological problems, incidental to our business and to PVR's coal or natural gas midstream businesses; PVR's ability to acquire new coal reserves or natural gas midstream assets and new sources of natural gas supply and connections to third-party pipelines on satisfactory terms; PVR's ability to retain existing or acquire new natural gas midstream customers and coal lessees; the ability of PVR's lessees to produce sufficient quantities of coal on an economic basis from PVR's reserves and obtain favorable contracts for such production; the occurrence of unusual weather or operating conditions including force majeure events; delays in anticipated start-up dates of our oil and natural gas production, of PVR's lessees' mining operations and related coal infrastructure projects and new processing plants in PVR's natural gas midstream business; environmental risks affecting the drilling and producing of oil and gas wells, the mining of coal reserves or the production, gathering and processing of natural gas; the timing of receipt of necessary governmental permits by us and by PVR or PVR's lessees; hedging results; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters, including with respect to emissions levels applicable to coal-burning power generators; uncertainties relating to the outcome of current and future litigation regarding mine permitting; risks and uncertainties relating to general domestic and international economic (including inflation, interest rates and financial and credit markets) and political conditions (including the impact of potential terrorist attacks); PVG's ability to generate sufficient cash from its interests in PVR to maintain and pay the quarterly distribution to its unitholders; uncertainties relating to our continued ownership of interests in PVG and PVR; and other risks set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
Additional information concerning these and other factors can be found in our press releases and public periodic filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2008. Many of the factors that will determine our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
PENN VIRGINIA CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS - unaudited (in thousands, except per share data) Three Months Ended Year Ended December 31, December 31, 2009 2008 (a) 2009 2008 (a) Revenues Natural gas $ 40,361 $ 73,165 $ 169,666 $ 368,801 Crude oil 11,846 9,087 43,258 46,529 Natural gas liquids 5,182 2,405 15,735 21,292 (NGLs) Natural gas midstream 138,893 95,523 428,016 589,783 Coal royalties 29,987 33,923 120,435 122,834 Gain on sale of property 427 91 2,345 31,426 and equipment Other 10,201 11,496 35,682 40,186 Total revenues 236,897 225,690 815,137 1,220,851 Expenses Cost of midstream gas 105,275 76,374 333,854 484,621 purchased Operating 20,249 23,238 86,766 89,891 Exploration 3,383 22,671 37,970 42,436 Exploration - drilling (530 ) - 19,784 - rig standby charges - (b) Taxes other than income 5,417 5,261 22,073 28,586 General and administrative (excluding 19,793 17,313 67,274 66,612 equity compensation) Equity-based compensation 1,420 2,175 12,726 7,882 - (c) Depreciation, depletion 50,207 58,755 223,367 192,236 and amortization Impairments on assets 9,500 - 97,400 - held for sale Impairments 1,598 51,764 10,526 51,764 Loss on sale of assets - - 1,599 - Total expenses 216,312 257,551 913,339 964,028 Operating income (loss) 20,585 (31,861 ) (98,202 ) 256,823 Other income (expense) Interest expense (18,552 ) (13,986 ) (68,884 ) (49,299 ) Derivatives 3,376 50,969 11,854 46,582 Other 338 116 2,612 (666 ) Income (loss) before income taxes and 5,747 5,238 (152,620 ) 253,440 noncontrolling interests Income tax benefit 5,665 2,432 75,252 (71,920 ) (expense) Net income (loss) $ 11,412 $ 7,670 $ (77,368 ) $ 181,520 Less net income attributable to (16,763 ) (8,184 ) (37,275 ) (60,436 ) noncontrolling interests Income (loss) $ (5,351 ) $ (514 ) $ (114,643 ) $ 121,084 attributable to PVA Income (loss) per share attributable to PVA Basic $ (0.12 ) $ (0.01 ) $ (2.62 ) $ 2.89 Diluted $ (0.12 ) $ (0.01 ) $ (2.62 ) $ 2.87 Weighted average shares 45,434 41,907 43,811 41,760 outstanding, basic Weighted average shares 45,434 41,907 43,811 42,031 outstanding, diluted Three Months Ended Year Ended December 31, December 31, 2009 2008 2009 2008 Production Natural gas (MMcf) 9,480 11,624 43,338 41,493 Crude oil (MBbls) 162 175 750 506 NGLs (MBbls) 146 92 527 392 Total natural gas, crude oil and NGL production 11,328 13,226 51,000 46,881 (MMcfe) Prices Natural gas ($ per Mcf) $ 4.26 $ 6.29 $ 3.91 $ 8.89 Crude oil ($ per Bbl) $ 73.12 $ 51.93 $ 57.68 $ 91.95 NGLs ($ per Bbl) $ 35.49 $ 26.14 $ 29.86 $ 54.32
(a) As a result of adopting accounting guidance for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement), we are required to present our results of operations retrospectively as if the standard had been in effect for all periods presented. (b) Drilling rig standby charges represent fees paid in connection with the deferral of drilling associated with contractually committed rigs and frac tank rentals. (c) Our equity-based compensation expense includes our stock option expense and the amortization of restricted stock and restricted stock units related to employee awards in accordance with accounting guidance of share-based payments.
PENN VIRGINIA CORPORATION CONSOLIDATED BALANCE SHEETS - unaudited (in thousands) December 31, December 31, 2009 2008 Assets Current assets $ 306,542 $ 263,518 Net property and equipment 2,352,358 2,512,177 Other assets 236,907 220,870 Total assets $ 2,895,807 $ 2,996,565 Liabilities and shareholders' equity Current liabilities $ 160,835 $ 247,594 Long-term debt of PVR 620,100 568,100 Revolving credit facility - 332,000 Senior notes 291,749 - Convertible notes 206,678 199,896 Other liabilities and deferred taxes 264,558 312,645 PVA shareholders' equity 1,021,976 1,039,103 Noncontrolling interests 329,911 297,227 Total shareholders' equity 1,351,887 1,336,330 Total liabilities and shareholders' equity $ 2,895,807 $ 2,996,565
CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited (in thousands) Three Months Ended Year Ended December 31, December 31, 2009 2008 2009 2008 Cash flows from operating activities Net income (loss) $ 11,412 $ 7,670 $ (77,368 ) $ 181,520 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion 50,207 58,755 223,367 192,236 and amortization Impairments 11,098 51,764 107,926 51,764 Derivative contracts: Total derivative losses (2,512 ) (49,618 ) (5,333 ) (41,102 ) (gains) Cash receipts (payments) 9,211 654 61,147 (46,086 ) to settle derivatives Deferred income taxes (12,496 ) (1,554 ) (83,224 ) 58,551 Dry hole and unproved 2,802 20,855 33,278 35,847 leasehold expense Other 4,660 7,214 20,724 (18,904 ) Operating cash flow (see attached table "Certain Non-GAAP 74,382 95,740 280,517 413,826 Financial Measures") Changes in operating (20,458 ) 11,347 (4,570 ) (30,052 ) assets and liabilities Net cash provided by 53,924 107,087 275,947 383,774 operating activities Cash flows from investing activities Acquisitions (8,633 ) (15,562 ) (46,894 ) (293,747 ) Additions to property and (20,901 ) (193,308 ) (239,459 ) (585,339 ) equipment Other 7,543 (435 ) 16,241 33,519 Net cash used in (21,991 ) (209,305 ) (270,112 ) (845,567 ) investing activities Cash flows from financing activities Dividends paid (2,558 ) (2,361 ) (9,836 ) (9,398 ) Distributions paid to noncontrolling interest (22,806 ) (18,416 ) (78,171 ) (64,245 ) holders Proceeds from (repayments - (38,889 ) (7,542 ) 7,542 of) bank borrowings Net proceeds from (repayments of) PVA - 152,000 (332,000 ) 210,000 borrowings Net proceeds from PVR (8,000 ) 10,000 52,000 156,000 borrowings Net proceeds from issuance of PVA senior - - 291,009 - notes Net proceeds from issuance of PVR partners' - - - 138,141 capital Net proceeds from sale of - - 118,080 - PVG units Net proceeds from - - 64,835 - issuance of PVA equity Other (5,272 ) (785 ) (24,217 ) 7,564 Net cash provided by (38,636 ) 101,549 74,158 445,604 financing activities Net increase (decrease) in cash and cash (6,703 ) (669 ) 79,993 (16,189 ) equivalents Cash and cash equivalents 105,034 19,007 18,338 34,527 - beginning of period Cash and cash equivalents $ 98,331 $ 18,338 $ 98,331 $ 18,338 - end of period
PENN VIRGINIA CORPORATION QUARTERLY SEGMENT INFORMATION - unaudited (in thousands except where noted) Three months ended December Oil and Gas 31, 2009 Coal and Natural Natural Gas Eliminations Consolidated Resource Midstream and Other Amount per Mcfe Management (a) Production Total natural gas, crude oil 11,328 and NGLs (MMcfe) Natural gas 9,480 (MMcf) Crude oil 162 (MBbls) NGLs (MBbls) 146 Coal royalty tons 8,456 (thousands of tons) Midstream system 27,902 throughput volumes (MMcf) Revenues Natural gas $ 40,361 $ 4.26 $ - $ - $ - $ 40,361 Crude oil 11,846 73.12 - - - 11,846 NGLs 5,182 35.49 - - - 5,182 Natural gas - - 155,907 (17,014 ) 138,893 midstream Coal royalties - 29,987 - - 29,987 Gain on sale of property 427 - - - 427 and equipment Other 1,176 6,038 2,969 18 10,201 Total revenues 58,992 5.21 36,025 158,876 (16,996 ) 236,897 Expenses Cost of midstream gas - - 121,454 (16,179 ) 105,275 purchased Operating 12,911 1.14 2,080 6,093 (835 ) 20,249 expense Exploration 3,383 0.30 - - - 3,383 Exploration - drilling rig (530 ) (0.05 ) - - - (530 ) standby charges Taxes other 3,800 0.34 558 1,028 31 5,417 than income General and 6,655 0.59 3,107 3,640 7,811 21,213 administrative Depreciation, depletion and 31,187 2.74 7,773 10,491 756 50,207 amortization Impairments on assets held 9,500 0.84 - - - 9,500 for sale Impairments 87 0.01 1,511 - - 1,598 Total expenses 66,993 5.91 15,029 142,706 (8,416 ) 216,312 Operating $ (8,001 ) $ (0.70 ) $ 20,996 $ 16,170 $ (8,580 ) $ 20,585 income (loss) Additions to property and $ 21,805 $ 206 $ 7,180 $ 343 $ 29,534 equipment Three months ended December Oil and Gas 31, 2008 Coal and Natural Natural Gas Eliminations Consolidated Resource Midstream and Other Amount per Mcfe Management (a) Production Total natural gas, crude oil 13,226 and NGLs (MMcfe) Natural gas 11,624 (MMcf) Crude oil 175 (MBbls) NGLs (MBbls) 92 Coal royalty tons 8,715 (thousands of tons) Midstream system 29,786 throughput volumes (MMcf) Revenues Natural gas $ 73,165 $ 6.29 $ - $ - $ - $ 73,165 Crude oil 9,087 51.93 - - - 9,087 NGLs 2,405 26.14 - - - 2,405 Natural gas - - 118,875 (23,352 ) 95,523 midstream Coal royalties - 33,923 - - 33,923 Gain on sale of property 91 - - - 91 and equipment Other 1,191 8,394 1,793 118 11,496 Total revenues 85,939 6.50 42,317 120,668 (23,234 ) 225,690 Expenses Cost of midstream gas - - 98,752 (22,378 ) 76,374 purchased Operating 16,089 1.22 2,418 5,706 (975 ) 23,238 expense Exploration 22,671 1.71 - - - 22,671 Taxes other 3,856 0.29 565 676 164 5,261 than income General and 6,415 0.49 2,826 3,741 6,506 19,488 administrative Depreciation, depletion and 41,427 3.13 8,072 8,772 484 58,755 amortization Impairments 19,963 1.51 - 31,801 - 51,764 Total expenses 110,421 8.35 13,881 149,448 (16,199 ) 257,551 Operating $ (24,482 ) $ (1.85 ) $ 28,436 $ (28,780 ) $ (7,035 ) $ (31,861 ) income (loss) Additions to property and $ 184,246 $ 2,084 $ 22,011 $ 529 $ 208,870 equipment
(a) Natural gas revenues are shown per Mcf, crude oil and NGL revenues are shown per Bbl, and all other amounts are shown per Mcfe.
PENN VIRGINIA CORPORATION YEAR-TO-DATE SEGMENT INFORMATION - unaudited (in thousands except where noted) Year ended December 31, Oil and Gas 2009 Coal and Natural Natural Gas Eliminations Consolidated Resource Midstream and Other Amount per Mcfe Management (a) Production Total natural gas, crude oil 51,000 and NGLs (MMcfe) Natural gas 43,338 (MMcf) Crude oil 750 (MBbls) NGLs (MBbls) 527 Coal royalty tons 34,330 (thousands of tons) Midstream system 121,335 throughput volumes (MMcf) Revenues Natural gas $ 169,666 $ 3.91 $ - $ - $ - $ 169,666 Crude oil 43,258 57.68 - - - 43,258 NGLs 15,735 29.86 - - - 15,735 Natural gas - - 504,789 (76,773 ) 428,016 midstream Coal royalties - 120,435 - - 120,435 Gain on sale of property 2,345 - - - 2,345 and equipment Other 4,080 24,165 7,315 122 35,682 Total revenues 235,084 4.61 144,600 512,104 (76,651 ) 815,137 Expenses Cost of midstream gas - - 406,583 (72,729 ) 333,854 purchased Operating 55,699 1.09 8,660 26,451 (4,044 ) 86,766 expense Exploration 37,970 0.74 - - - 37,970 Exploration - drilling rig 19,784 0.39 - - - 19,784 standby charges Taxes other 16,556 0.32 1,704 3,090 723 22,073 than income General and 22,625 0.44 13,867 16,301 27,207 80,000 administrative Depreciation, depletion and 150,429 2.96 31,330 38,905 2,703 223,367 amortization Impairments on assets held 97,400 1.91 - - - 97,400 for sale Impairments 9,015 0.18 1,511 - - 10,526 Loss on sale 1,599 0.03 - - - 1,599 of assets Total expenses 411,077 8.06 57,072 491,330 (46,140 ) 913,339 Operating $ (175,993 ) $ (3.45 ) $ 87,528 $ 20,774 $ (30,511 ) $ (98,202 ) income (loss) Additions to property and $ 203,678 $ 2,252 $ 78,425 $ 1,998 $ 286,353 equipment Year ended December 31, Oil and Gas 2008 Coal and Natural Natural Gas Eliminations Consolidated Resource Midstream and Other Amount per Mcfe Management (a) Production Total natural gas, crude oil 46,881 and NGLs (MMcfe) Natural gas 41,493 (MMcf) Crude oil 506 (MBbls) NGLs (MBbls) 392 Coal royalty tons 33,690 (thousands of tons) Midstream system 98,683 throughput volumes (MMcf) Revenues Natural gas $ 368,801 $ 8.89 $ - $ - $ - $ 368,801 Crude oil 46,529 91.95 - - - 46,529 NGLs 21,292 54.32 - - - 21,292 Natural gas - - 720,002 (130,219 ) 589,783 midstream Coal royalties - 122,834 - - 122,834 Gain on sale of property 30,634 792 - - 31,426 and equipment Other 2,074 29,701 8,251 160 40,186 Total revenues 469,330 10.01 153,327 728,253 (130,059 ) 1,220,851 Expenses Cost of midstream gas - - 612,530 (127,909 ) 484,621 purchased Operating 59,459 1.27 11,940 20,737 (2,245 ) 89,891 expense Exploration 42,436 0.91 - - - 42,436 Taxes other 23,336 0.50 1,680 2,578 992 28,586 than income General and 21,284 0.45 12,606 14,300 26,304 74,494 administrative Depreciation, depletion and 132,276 2.82 30,805 27,361 1,794 192,236 amortization Impairments 19,963 0.43 - 31,801 - 51,764 Total expenses 298,754 6.37 57,031 709,307 (101,064 ) 964,028 Operating $ 170,576 $ 3.64 $ 96,296 $ 18,946 $ (28,995 ) $ 256,823 income (loss) Additions to property and $ 607,220 $ 27,270 $ 304,758 $ (60,162 ) $ 879,086 equipment
(a) Natural gas revenues are shown per Mcf, crude oil and NGL revenues are shown per Bbl, and all other amounts are shown per Mcfe.
PENN VIRGINIA CORPORATION CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited (in thousands) Three Months Ended Year Ended December 31, December 31, 2009 2008 2009 2008 Reconciliation of GAAP "Net cash provided by operating activities" to Non-GAAP "Operating cash flow" Net cash provided by $ 53,924 $ 107,087 $ 275,947 $ 383,774 operating activities Adjustments: Changes in operating assets 20,458 (11,347 ) 4,570 30,052 and liabilities Operating cash flow (a) $ 74,382 $ 95,740 $ 280,517 $ 413,826 Reconciliation of GAAP "Net income (loss) attributable to PVA" to Non-GAAP "Net income (loss) attributable to PVA, as adjusted" Net income (loss) $ (5,351 ) $ (514 ) $ (114,643 ) $ 121,084 attributable to PVA Adjustments for derivatives: Derivative losses (gains) (2,512 ) (49,618 ) (5,333 ) (41,102 ) included in income Cash receipts (payments) to 9,211 654 61,147 (46,086 ) settle derivatives Adjustment for drilling rig (530 ) - 19,784 - standby charges Adjustment for impairments 11,098 51,764 107,926 51,764 Adjustment for net gains on (427 ) (91 ) (746 ) (31,426 ) sale of assets Impact of adjustments on (6,629 ) (3,033 ) (16,123 ) 10,616 noncontrolling interests Impact of adjustments on (5,183 ) 11,616 (66,042 ) 20,955 income taxes $ (323 ) $ 10,778 $ (14,030 ) $ 85,805 Less: Portion of subsidiary net income (loss) allocated to undistributed share-based (42 ) (40 ) (116 ) (295 ) compensation awards, net of taxes Net income (loss) attributable to PVA, as $ (365 ) $ 10,738 $ (14,146 ) $ 85,510 adjusted (b) Net income (loss) attributable to PVA, as $ (0.01 ) $ 0.26 $ (0.32 ) $ 2.03 adjusted, per share, diluted
(a) Operating cash flow represents net cash provided by operating activities before changes in operating assets and liabilities. We believe that operating cash flow is widely accepted as a financial indicator of an energy company's ability to generate cash which is used to internally fund investing activities, service debt and pay dividends. Operating cash flow is widely used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the energy industry. Operating cash flow is presented because we believe it is a useful adjunct to net cash provided by operating activities under GAAP. Operating cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income. (b) Net income (loss) attributable to PVA as adjusted represents net income (loss) attributable to PVA adjusted to exclude the effects of non-cash changes in the fair value of derivatives, drilling rig standby charges, impairments, gains and losses on the sale of assets and net income of PVR allocated to unvested PVR restricted units awarded as equity compensation that we hold until vesting. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry, as well as companies within the natural gas midstream industry. We use this information for comparative purposes within these industries. Net income (loss) attributable to PVA, as adjusted, is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income attributable to PVA.
PENN VIRGINIA CORPORATION CONVERSION TO NON-GAAP EQUITY METHOD - unaudited (in thousands) Reconciliation of GAAP "Income Statements As Reported" to Non-GAAP "Income Statements, as Adjusted" (a): Three months ended December 31, 2009 Three months ended December 31, 2008 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Revenues Natural gas $ 40,361 $ - $ 40,361 $ 73,165 $ - $ 73,165 Crude oil 11,846 - 11,846 9,087 - 9,087 NGLs 5,182 - 5,182 2,405 - 2,405 Natural gas 138,893 (138,893 ) - 95,523 (95,523 ) - midstream Coal royalties 29,987 (29,987 ) - 33,923 (33,923 ) - Other 10,628 (9,007 ) 1,621 11,587 (10,187 ) 1,400 Total revenues 236,897 (177,887 ) 59,010 225,690 (139,633 ) 86,057 Expenses Cost of midstream gas 105,275 (105,275 ) - 76,374 (76,374 ) - purchased Operating 20,249 (8,173 ) 12,076 23,238 (7,150 ) 16,088 Exploration 3,383 - 3,383 22,671 - 22,671 Exploration - drilling rig (530 ) - (530 ) - - - standby charges Taxes other 5,417 (1,586 ) 3,831 5,261 (1,241 ) 4,020 than income General and 21,213 (7,146 ) 14,067 19,488 (6,919 ) 12,569 administrative Depreciation, depletion and 50,207 (18,264 ) 31,943 58,755 (16,844 ) 41,911 amortization Impairments on assets held 9,500 - 9,500 - - - for sale Impairments 1,598 (1,511 ) 87 51,764 (31,801 ) 19,963 Loss on sale - - - - - - of assets Total expenses 216,312 (141,955 ) 74,357 257,551 (140,329 ) 117,222 Operating 20,585 (35,932 ) (15,347 ) (31,861 ) 696 (31,165 ) income (loss) Other income (expense) Interest (18,552 ) 6,167 (12,385 ) (13,986 ) 7,306 (6,680 ) expense Derivatives 3,376 7,709 11,085 50,969 (23,261 ) 27,708 Equity earnings in - 5,626 5,626 - 7,408 7,408 PVG and PVR Other 338 (333 ) 5 116 (333 ) (217 ) Income (loss) before taxes and 5,747 (16,763 ) (11,016 ) 5,238 (8,184 ) (2,946 ) noncontrolling interests Income tax benefit 5,665 - 5,665 2,432 - 2,432 (expense) Net income 11,412 (16,763 ) (5,351 ) 7,670 (8,184 ) (514 ) (loss) Less net income attributable (16,763 ) 16,763 - (8,184 ) 8,184 - to noncontrolling interests Net income (loss) $ (5,351 ) $ - $ (5,351 ) $ (514 ) $ - $ (514 ) attributable to PVA Year ended December 31, 2009 Year ended December 31, 2008 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Revenues Natural gas $ 169,666 $ - $ 169,666 $ 368,801 $ - $ 368,801 Crude oil 43,258 - 43,258 46,529 - 46,529 NGLs 15,735 - 15,735 21,292 - 21,292 Natural gas 428,016 (428,016 ) - 589,783 (589,783 ) - midstream Coal royalties 120,435 (120,435 ) - 122,834 (122,834 ) - Other 38,027 (31,480 ) 6,547 71,612 (38,744 ) 32,868 Total revenues 815,137 (579,931 ) 235,206 1,220,851 (751,361 ) 469,490 Expenses Cost of midstream gas 333,854 (333,854 ) - 484,621 (484,621 ) - purchased Operating 86,766 (35,111 ) 51,655 89,891 (30,367 ) 59,524 Exploration 37,970 - 37,970 42,436 - 42,436 Exploration - drilling rig 19,784 - 19,784 - - - standby charges Taxes other 22,073 (4,794 ) 17,279 28,586 (4,258 ) 24,328 than income General and 80,000 (32,545 ) 47,455 74,494 (28,976 ) 45,518 administrative Depreciation, depletion and 223,367 (70,235 ) 153,132 192,236 (58,166 ) 134,070 amortization Impairments on assets held 97,400 - 97,400 - - - for sale Impairments 10,526 (1,511 ) 9,015 51,764 (31,801 ) 19,963 Loss on sale 1,599 - 1,599 - - - of assets Total expenses 913,339 (478,050 ) 435,289 964,028 (638,189 ) 325,839 Operating (98,202 ) (101,881 ) (200,083 ) 256,823 (113,172 ) 143,651 income (loss) Other income (expense) Interest (68,884 ) 24,653 (44,231 ) (49,299 ) 24,672 (24,627 ) expense Derivatives 11,854 19,714 31,568 46,582 (16,837 ) 29,745 Equity earnings in - 21,592 21,592 - 42,162 42,162 PVG and PVR Other 2,612 (1,353 ) 1,259 (666 ) 2,739 2,073 Income (loss) before taxes and (152,620 ) (37,275 ) (189,895 ) 253,440 (60,436 ) 193,004 noncontrolling interests Income tax benefit 75,252 - 75,252 (71,920 ) - (71,920 ) (expense) Net income (77,368 ) (37,275 ) (114,643 ) 181,520 (60,436 ) 121,084 (loss) Less net income attributable (37,275 ) 37,275 - (60,436 ) 60,436 - to noncontrolling interests Net income (loss) $ (114,643 ) $ - $ (114,643 ) $ 121,084 $ - $ 121,084 attributable to PVA
(a) Equity method income statements represent consolidated income statements, minus 100% of PVG's consolidated results of operations, plus noncontrolling interest which represents the portion of PVG's consolidated results of operations that we do not own. We believe equity method income statements provide useful information to allow the public to more easily discern PVG's effect on our operations.
PENN VIRGINIA CORPORATION CONVERSION TO NON-GAAP EQUITY METHOD - unaudited (continued) (in thousands) Reconciliation of GAAP "Balance Sheet As Reported" to Non-GAAP "Balance Sheet, as Adjusted" (a): December 31, 2009 December 31, 2008 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Assets Current assets $ 306,542 $ (107,782 ) $ 198,760 $ 263,518 $ (126,299 ) $ 137,219 Net property and 2,352,358 (900,844 ) 1,451,514 2,512,177 (895,119 ) 1,617,058 equipment Equity investment in - 155,692 155,692 - 241,296 241,296 PVG and PVR Other assets 236,907 (210,437 ) 26,470 220,870 (206,256 ) 14,614 Total assets $ 2,895,807 $ (1,063,371 ) $ 1,832,436 $ 2,996,565 $ (986,378 ) $ 2,010,187 Liabilities and shareholders' equity Current liabilities $ 160,835 $ (86,323 ) $ 74,512 $ 247,594 $ (89,908 ) $ 157,686 Long-term debt 1,118,527 (620,100 ) 498,427 1,099,996 (568,100 ) 531,896 Other liabilities and 264,558 (27,037 ) 237,521 312,645 (31,143 ) 281,502 deferred taxes - PVA shareholders' 1,021,976 - 1,021,976 1,039,103 - 1,039,103 equity Noncontrolling 329,911 (329,911 ) - 297,227 (297,227 ) - interests Total shareholders' 1,351,887 (329,911 ) 1,021,976 1,336,330 (297,227 ) 1,039,103 equity Total liabilities and $ 2,895,807 $ (1,063,371 ) $ 1,832,436 $ 2,996,565 $ (986,378 ) $ 2,010,187 shareholders' equity Reconciliation of GAAP "Statement of Cash Flows As Reported" to Non-GAAP "Statement of Cash Flows, as Adjusted" (b): Three months ended December 31, 2009 Three months ended December 31, 2008 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Cash flows from operating activities Net income (loss) $ 11,412 $ - $ 11,412 $ 7,670 $ - $ 7,670 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and 50,207 (18,264 ) 31,943 58,755 (16,844 ) 41,911 amortization Impairments 11,098 (1,511 ) 9,587 51,764 (31,801 ) 19,963 Derivative contracts: Total derivative (2,512 ) (8,466 ) (10,978 ) (49,618 ) 21,909 (27,709 ) losses (gains) Cash receipts (payments) to settle 9,211 1,135 10,346 654 5,187 5,841 derivatives Deferred income taxes (12,496 ) - (12,496 ) (1,554 ) - (1,554 ) Dry hole and unproved 2,802 - 2,802 20,855 - 20,855 leasehold expense Investment in PVG and - (23,224 ) (23,224 ) - (15,592 ) (15,592 ) PVR Cash distributions - 7,347 7,347 - 11,571 11,571 from PVG and PVR Other 4,660 (1,357 ) 3,303 7,214 (2,631 ) 4,583 Operating cash flow 74,382 (44,340 ) 30,042 95,740 (28,201 ) 67,539 Changes in operating assets and (20,458 ) 8,303 (12,155 ) 11,347 (4,299 ) 7,048 liabilities Net cash provided by 53,924 (36,037 ) 17,887 107,087 (32,500 ) 74,587 operating activities Net cash used in (21,991 ) 7,111 (14,880 ) (209,305 ) 24,753 (184,552 ) investing activities - Net cash provided by (38,636 ) 30,806 (7,830 ) 101,549 8,416 109,965 financing activities Net increase (decrease) in cash (6,703 ) 1,880 (4,823 ) (669 ) 669 - and cash equivalents Cash and cash equivalents-beginning 105,034 (21,194 ) 83,840 19,007 (19,007 ) - of period Cash and cash equivalents-end of $ 98,331 $ (19,314 ) $ 79,017 $ 18,338 $ (18,338 ) $ - period Year ended December 31, 2009 Year ended December 31, 2008 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Cash flows from operating activities Net income (loss) $ (77,368 ) $ - $ (77,368 ) $ 181,520 $ - $ 181,520 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and 223,367 (70,235 ) 153,132 192,236 (58,166 ) 134,070 amortization Impairments 107,926 (1,511 ) 106,415 51,764 (31,801 ) 19,963 Derivative contracts: Total derivative (5,333 ) (22,700 ) (28,033 ) (41,102 ) 11,357 (29,745 ) losses (gains) Cash settlements of 61,147 (3,000 ) 58,147 (46,086 ) 38,466 (7,620 ) derivatives Deferred income taxes (83,224 ) - (83,224 ) 58,551 - 58,551 Dry hole and unproved 33,278 - 33,278 35,847 - 35,847 leasehold expense Investment in PVG and - (62,911 ) (62,911 ) - (102,598 ) (102,598 ) PVR Cash distributions - 42,279 42,279 - 44,018 44,018 from PVG and PVR Other 20,724 (2,620 ) 18,104 (18,904 ) (1,421 ) (20,325 ) Operating cash flow 280,517 (120,698 ) 159,819 413,826 (100,145 ) 313,681 Changes in operating assets and (4,570 ) 4,763 193 (30,052 ) 6,976 (23,076 ) liabilities Net cash provided by 275,947 (115,935 ) 160,012 383,774 (93,169 ) 290,605 operating activities Net cash used in (270,112 ) 79,530 (190,582 ) (845,567 ) 331,030 (514,537 ) investing activities - Net cash provided by 74,158 35,429 109,587 445,604 (225,696 ) 219,908 financing activities Net increase (decrease) in cash 79,993 (976 ) 79,017 (16,189 ) 12,165 (4,024 ) and cash equivalents Cash and cash equivalents-beginning 18,338 (18,338 ) - 34,527 (30,503 ) 4,024 of period Cash and cash equivalents-end of $ 98,331 $ (19,314 ) $ 79,017 $ 18,338 $ (18,338 ) $ - period
(a) Equity method balance sheets represent consolidated balance sheets, minus 100% of PVG's consolidated balance sheets, excluding noncontrolling interests which represents the portion of PVG's consolidated balance sheet that we do not own and including other adjustments to eliminate inter-company transactions. We believe equity method balance sheets provide useful information to allow the public to more easily discern PVG's effect on our assets, liabilities and shareholders' equity. (b) Equity method statements of cash flows represent consolidated statements of cash flows, minus 100% of PVG's consolidated statements of cash flows, excluding noncontrolling interests which represents the portion of PVG's consolidated results of operations that we do not own and including other adjustments to eliminate inter-company transactions. We believe equity method statements of cash flows provide useful information to allow the public to more easily discern PVG's effect on our cash flows.
PENN VIRGINIA CORPORATION GUIDANCE TABLE - unaudited (dollars in millions except where noted) We are providing the following guidance regarding financial and operational expectations for full-year 2010. Actual First Second Third Fourth YTD Full-Year Oil & Gas Segment: Quarter Quarter Quarter Quarter 2009 2010 Guidance 2009 2009 2009 2009 Production: Natural gas (Bcf) - 11.8 11.4 10.6 9.5 43.3 38.2 - 41.4 (a) Crude oil (MBbls) - 171 215 202 162 750 900 - 975 (a) NGLs (MBbls) 147 140 94 146 527 575 - 625 Equivalent 13.7 13.6 12.4 11.3 51.0 47.0 - 51.0 production (Bcfe) Equivalent daily production (MMcfe 152.3 149.5 134.9 123.1 139.7 128.8 - 139.7 per day) Expenses: Cash operating expenses ($ per $ 1.80 1.79 1.82 2.06 1.86 1.95 - 2.10 Mcfe) Exploration $ 21.3 17.5 16.1 2.8 57.7 40.0 - 50.0 Depreciation, depletion and $ 2.92 2.94 3.17 2.74 2.96 3.00 - 3.10 amortization ($ per Mcfe) Impairments $ 1.2 3.3 92.4 9.6 106.4 Capital expenditures: Development drilling $ 76.5 37.3 8.3 18.1 140.2 250.0 - 275.0 Exploratory drilling $ 1.5 - 0.7 0.3 2.5 40.0 - 50.0 Pipeline, gathering, $ 5.1 2.4 0.9 1.0 9.4 7.0 - 8.0 facilities Seismic $ 0.7 0.4 0.1 - 1.2 10.0 - 11.0 Lease acquisition, field projects and $ 1.8 2.8 5.8 8.1 18.5 68.0 - 81.0 other Total segment $ 85.6 42.9 15.8 27.5 171.8 375.0 - 425.0 capital expenditures Coal and Natural Resource Segment (PVR): Coal royalty tons 8.7 8.7 8.4 8.5 34.3 31.0 - 32.0 (millions) Revenues: Average coal $ 3.50 3.43 3.56 3.55 3.51 3.30 - 3.40 royalties per ton Average coal royalties per ton, $ 3.36 3.25 3.37 3.38 3.34 3.15 - 3.25 net of coal royalties expense Other $ 7.6 5.1 5.4 6.0 24.1 21.0 - 22.0 Expenses: Cash operating $ 5.9 6.6 6.0 5.7 24.2 22.0 - 22.5 expenses Depreciation, depletion and $ 7.4 8.2 8.0 7.8 31.3 28.5 - 29.0 amortization Capital expenditures: Expansion and $ 1.3 0.6 0.1 0.1 2.1 6.0 - 7.0 acquisitions Other capital $ - - - 0.2 0.2 - - 0.5 expenditures Total segment $ 1.3 0.6 0.1 0.3 2.3 6.0 - 7.5 capital expenditures Natural Gas Midstream Segment (PVR): System throughput volumes (MMcf per 359 344 324 303 332 350 - 360 day) (b) Expenses: Cash operating $ 11.8 11.6 11.6 10.8 45.8 55.0 - 60.0 expenses Depreciation, depletion and $ 9.1 9.5 9.8 10.5 38.9 42.0 - 44.0 amortization Capital expenditures: Expansion and $ 11.2 10.3 37.9 5.0 64.4 34.0 - 42.0 acquisitions Other capital $ 3.3 1.4 1.4 2.3 8.4 16.0 - 18.0 expenditures Total segment $ 14.5 11.7 39.3 7.3 72.8 50.0 - 60.0 capital expenditures Corporate and Other: General and administrative $ 5.2 5.8 6.4 7.4 24.8 22.0 - 24.0 expense - PVA General and administrative $ 0.5 0.6 0.9 0.4 2.4 2.5 - 3.0 expense - PVG Interest expense: PVA end of period $ 591.5 564.3 496.3 498.4 498.4 debt outstanding PVA average interest 4.3% 6.0% 9.8% 12.6% 8.2% rate PVR end of period $ 595.1 597.1 628.1 620.1 620.1 debt outstanding PVR average interest 3.9% 4.2% 4.2% 3.9% 4.1% rate Income tax rate 38.8% 39.7% 38.7% 51.4% 39.6% Cash distributions received from PVG $ 11.5 11.6 11.5 7.6 42.2 and PVR Other capital $ 0.6 0.9 0.2 0.3 2.0 1.5 - 2.0 expenditures These estimates are meant to provide guidance only and are subject to change as PVA's and PVR's operating environments change. See Notes on subsequent pages.
PENN VIRGINIA CORPORATION GUIDANCE TABLE - unaudited - (continued) Notes to Guidance Table: (a) The following table shows our current derivative positions in the oil and gas segment as of December 31, 2009: Weighted Average Price Average Volume Additional Floor Ceiling Per Day Put Option Natural gas costless collars (MMBtu) ($ per MMBtu) First quarter 2010 35,000 4.96 7.41 Second quarter 2010 30,000 5.33 8.02 Third quarter 2010 30,000 5.33 8.02 Fourth quarter 2010 50,000 5.65 8.77 First quarter 2011 50,000 5.65 8.77 Second quarter 2011 30,000 5.67 7.58 Third quarter 2011 30,000 5.67 7.58 Fourth quarter 2011 20,000 6.00 8.50 First quarter 2012 20,000 6.00 8.50 Natural gas three-way collars (1) (MMBtu) ($ per MMBtu) First quarter 2010 30,000 6.83 9.50 13.60 Natural gas swaps (MMBtu) ($ per MMBtu) First quarter 2010 15,000 6.19 Second quarter 2010 30,000 6.17 Third quarter 2010 30,000 6.17 Crude oil costless collars (barrels) ($ per barrel) First quarter 2010 500 60.00 74.75 Second quarter 2010 500 60.00 74.75 Third quarter 2010 500 60.00 74.75 Fourth quarter 2010 500 60.00 74.75
We estimate that, excluding the derivative positions described above, for every $1.00 per MMBtu increase or decrease in the natural gas price, oil and gas segment operating income for 2010 would increase or decrease by approximately $17.8 million. In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, oil and gas segment operating income for 2010 would increase or decrease by approximately $1.8 million. This assumes that crude oil prices, natural gas prices and inlet volumes remain constant at anticipated levels. These estimated changes in gross margin and operating income exclude potential cash receipts or payments in settling these derivative positions.
(1) A three-way collar is a combination of options: a sold call, a purchased put and a sold put. The sold call establishes the maximum price that we will receive for the contracted commodity volumes. The purchased put establishes the minimum price that we will receive for the contracted volumes unless the market price for the commodity falls below the sold put strike price, at which point the minimum price equals the reference price (i.e., NYMEX) plus the excess of the purchased put strike price over the sold put strike price.
PENN VIRGINIA CORPORATION GUIDANCE TABLE - unaudited - (continued) The costless collar natural gas prices per MMBtu per quarter include the (b) effects of basis differentials, if any. The following table shows current derivative positions for natural gas production in PVR's natural gas midstream segment as of December 31, 2009:
Average Swap Weighted Average Price Volume Per Day Price Put Call Crude oil collar (barrels) ($ per barrel) First quarter 2010 through 750 70.00 81.25 fourth quarter 2010 Crude oil collar (barrels) ($ per barrel) First quarter 2010 through 1,000 68.00 80.00 fourth quarter 2010 Natural gas purchase swap (MMBtu) ($ per MMbtu) First quarter 2010 through 5,000 5.815 fourth quarter 2010 NGL - natural gasoline (gallons) (per gallon) collar First quarter 2011 through 60,000 $1.55 $1.92 fourth quarter 2011 Crude oil collar (barrels) (per barrel) First quarter 2011 through 400 $75.00 $98.50 fourth quarter 2011 Natural gas purchase swap (MMBtu) ($ per MMBtu) First quarter 2011 through 3,000 6.430 fourth quarter 2011
We estimate that, excluding the derivative positions described above, for every $1.00 per MMBtu increase or decrease in the natural gas price, natural gas midstream gross margin and operating income for 2010 would decrease or increase by approximately $6.9 million. In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, natural gas midstream gross margin and operating income for 2010 would increase or decrease by approximately $11.5 million. This assumes that crude oil prices, natural gas prices and inlet volumes remain constant at anticipated levels. These estimated changes in gross margin and operating income exclude potential cash receipts or payments in settling these derivative positions.
Source: Penn Virginia Corporation
Released February 10, 2010